Why I vetoed the sales tax

I opposed the proposed sales tax. It has been represented as a “revenue neutral” “diversification” of taxes. If you pretend that the tax would be “revenue neutral” then what does the “diversification” accomplish other than add a new bureaucracy?

The hypothetical “average” real property owner saves money on one tax bill, which in theory will be offset by what they pay in additional sales tax. That seems neutral enough. In reality it is also a shifting of the burden of who actually pays taxes. A few large property owners will experience a temporary large reduction in their real property taxes that will far exceed their contribution to the new sales tax.

“Revenue neutral” means people who do not own at least the average amount of property will have to pay more taxes. This ballot proposition gives the largest land owners and absentee land owners a tax break that will be paid for by local people with little or no property during a recession.

So what? Doesn’t this simply mean that people who now own no property are simply being asked to carry their fair share of the tax burden? Renters may not get the borough real property tax bill directly, but the property tax always gets passed on to them.

Large property owners might initially be attracted to this measure because it indeed does result in less taxes for them, at least in the first year. However, the measure does not, and cannot, cap assessment increases. Once the assessments increase about 30 percent, the real property tax bill will be back where it was. Then the large land owners will have their old tax assessment plus the sales tax.

If this were truly “revenue neutral” why would we do it? We are creating a new tax-gathering bureaucracy to compel all businesses not in the current cities to collect a tax that provides no new revenue. In reality, the assembly already understands this will not be revenue neutral. The measure was amended at the last minute to provide for a fund for excess revenue to be applied to further real property tax relief. It doesn’t take any foresight to know that other “needs” for that excess will soon be found.

It is argued that this has a “sunset” provision. Sales taxes don’t have a history of ending.

To the contrary, most sales taxes start out small and slowly grow. Juneau is now up to 5 percent. Palmer moved from 2 to 3. What does happen is that the taxpayers are less sensitive to incremental tax payments than the annual total bill they currently get. Knowing the whole tax bill makes taxpayers more vigilant about government spending. Knowing how much money your government is taking is a good thing.

Talis Colberg is mayor of the Mat-Su Borough.